DeFi | How does an AMM price tokens?
An AMM doesn’t need to match buyers and sellers one-to-one. Traders swap between the two tokens in a liquidity pool.
An AMM’s quote is simply calculated from the ratio of the two tokens in the pool. When its price diverges from prices in other markets, arbitrage trades bring the pool’s price back toward the external price.
$UNI is the governance token of Uniswap, which popularized AMMs.
Cross-check information across multiple sources before taking action; don’t rely on just one source.
#UNI
An AMM doesn’t need to match buyers and sellers one-to-one. Traders swap between the two tokens in a liquidity pool.
An AMM’s quote is simply calculated from the ratio of the two tokens in the pool. When its price diverges from prices in other markets, arbitrage trades bring the pool’s price back toward the external price.
$UNI is the governance token of Uniswap, which popularized AMMs.
Cross-check information across multiple sources before taking action; don’t rely on just one source.
#UNI